calculate raw materials inventory value , Cost Accounting

Tony Allan Inc is a small manufacturer of metal products in Toronto. The company rents its factory building. It uses a job order costing system because it has a wide variety of products that receive varying attention and effort in the two factory departments, Machining and Assembly. Tony Allen Company uses a perpetual inventory system. Tony Allen Company had the following post-closing trial balance as of December 31, 2011:

101

Cash

$15,000

102

Accounts Receivable

40,000

103

Raw Materials Inventory

?

104

Goods in Process Inventory

4,000

105

Finished Goods Inventory

20,000

106

Unexpired Insurance

12,000

107

Office Equipment

20,000

108

Accumulated amortization - Office Equipment

$5,000

109

Factory Equipment

950,000

110

Accumulated Amortization - Factory Equipment

220,000

201

Accounts Payable

23,000

202

Wages and Salaries Payable

1,000

203

Accrued Utilities

2,000

204

Accrued Property Taxes

3,000

301

Capital Stock

100,000

302

Retained Earnings

?

?

?

Goods in process:

Job order

Dep't

Direct

Direct

Factory

Total

Number

Materials

Labour

Overhead

Cost

100

Machining

$1,800.00

$800.00

$900.00

$3,500.00

Assembly

$200.00

$200.00

$100.00

$500.00

$4,000.00

Finished goods:

Stock #

Reference

Quantity

Unit Cost

Total Cost

X-1

Job 98

100.00

80.00

$ 8,000.00

X-2

Job 99

1,000.00

12.00

$12,000.00

$20,000.00

Raw materials:

Code

Quantity

Unit Cost

Total Cost

A

4,000

?___(A)

?

B

10,000

?___(B)

?

C

400

?___(C)

?

Supplies

Various

$1,400.00

?

Labour costs and overhead costs:

The hourly rate including benefits for machinists is $_____(D) and for assemblers is $______(E).

To cost jobs as they are worked on, a predetermined or budgeted overhead rate was computed for 2009 based on the following budgeted cost drivers:

Machining department 69,450 machine hours

Assembly department $206,400 of direct labour

These overhead rates will be used throughout the year by each department. (Note that applying factory overhead on the basis of machine hours is not something you have done before in this course.) All overhead will be applied to all jobs worked on during the year in proportion to the machine-hour and/or direct-labour cost devoted to each job.

This budget was prepared after careful consideration of the sales outlook for the coming year. The forecasted budget consisted of the following items:

2,125

?

Receiving report #

1017

B

3,000

?

Receiving report #

1018

Supplies

N/A

$3,000.00

2. Assume that costs have not changed in the last year.

4. The direct material requisitions were summarized, and the following data were shown on a material usage report.

Machining Department Direct Material Usage

For the Month Ended January 31, 2012

Requisition

Type

Job Order

Quantity

M89

B

101

1,500

M90

A

102

3,000

M91

A

103

1,000

M92

B

103

1,000

M93

B

102

3,000

M94

B

101

200

M95

A

104

2,000

Assembly Department Direct Material Usage

For the Month Ended January 31, 2012

Requisition

Type

Job Order

Quantity

A301

C

100

5

A302

C

103

200

A303

C

101

800

A304

C

102

1,500

A305

C

103

20

5. A summary of payroll costs incurred as per the time tickets is as follows:

Actual Labour Hours Worked For the Month Ended January 31, 2012

Work

Job

Ticket

Order

Machining

Assembly

ML480

101

4

ML481

101

300

ML482

103

200

ML483

102

240

ML484

104

100

ML485

103

20

AL60

100

4

AL61

102

1,400

AL62

101

100

AL63

103

200

AL64

102

40

Total direct labour

864

1,744

Other payroll costs:

Machining

Assembly

Total

Indirect labour

$2,000

$1,500

$3,500

Factory Supervision

$1,200

$1,600

$2,800

Selling and admin. Wages

$6,000

(Only factory wages should be run through the factory payroll account, whereas the rest should go directly to Selling and Admin.)

6. Apply overhead to jobs. See data for item 6 to obtain machine hours worked. (A direct labourer operates more than one machine simultaneously, so machine hours are not necessarily equal to labour hours incurred by machinists.)

7. Use the following information to (a) record the completion and (b) the saleof the items:

Tony Allen Inc Production and Sales Data

For the Month Ended January 31, 2012

Job #

Finished

Date

Mach

Stock

Invoice

Sold

Sales

Units

Finished

Hours

Number

Number

Units

Revenue

98

100

Dec. 11/09

n/a

X-1

#923

100

$ 9,300

99

1000

Dec. 15/09

n/a

X-2

#924

1,000

26,000

100

50

Jan. 5/10

0

X-3

#925

20

1,800

101

1750

Jan. 12/10

3,000

X-4

#926

900

24,400

102

1000

Jan. 19/10

2,000

X-5

#927

950

75,000

103

100

Jan. 30/10

150

X-6

#928

50

6,500

104

Unfinished

800

5,950

$143,000

All sales are on account.

8. Gross payroll (factory and office) of $44,000 is paid in cash.

9. The following additional overhead costs were incurred during January:

Selling

Item

Total

Machining

Assembly

& Admin.

Account to Credit

Supplies requisitioned

$2,000

$1,500

$400

$100

?

Utilities

4,000

2,700

800

500

Accrued utilities

Repairs by outsiders

3,000

2,350

600

50

A/P

Miscellaneous

3,000

2,000

900

100

A/P

Insurance

1,000

600

200

200

?

Amortization on equip.

11,000

9,500

1,200

300

?

Rent

4,000

2,000

1,400

600

A/P

Property taxes

500

350

100

50

Accr.prop. Taxes

$28,500

$21,000

$5,600

$1,900

10. Utility bills received $2,900 (DR Accrued utilities and CR A/P).

11. Utility bills paid, $2,525.

12. Other selling and administrative expenses incurred, $15,000.

13. Other payments on account, $63,500.

14. Collections on account, $99,000.

15. Close under- or over-applied Factory Overhead to Cost of Goods Sold.

REQUIRED:

1. Enter all starting balances in the GL and sub ledgers. You will need to calculate your raw materials inventory value (about $30,000) based on your assigned variables. Adjust retained earnings to balance the opening trial balance. Round all totals to the nearest dollar and all per unit numbers to two decimal places.2. Journalize the above summary transactions, all dated January 31, 2012.(No new balance sheet accounts are required.You should need to add only the following temporary accounts: Revenue, Cost of Goods Sold, Selling & Administrative Expense, Factory Overhead, Factory Payroll.)3. Post to the general ledger and sub ledgers for January 2010, using proper posting references. (It is recommended that you post as you go, especially for accounts that have sub ledgers.)4. Prepare a trial balance as of January 31, 2012.5. Prepare schedules that reconcile the raw materials, goods in process and finished goods sub ledgers with the general ledger accounts as of January 31, 2012.6. Prepare a manufacturing statement for January 2012.7. Prepare an income statement and statement of retained earnings for January 2012.8. Prepare a (classified) balance sheet as of January 31, 2012.9. Prepare and post a closing entry (or entries) for the month end.10. Order your submission as follows: